Blair & Rosen, Inc. (B&R), is a brokerage firm that specializes in investment portfolios designed to meet the specific n

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Blair Rosen Inc B R Is A Brokerage Firm That Specializes In Investment Portfolios Designed To Meet The Specific N 1 (36.36 KiB) Viewed 18 times

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Blair & Rosen, Inc. (B&R), is a brokerage firm that specializes in investment portfolios designed to meet the specific nak tolerances of its clients. A dient who contacted B&R this past week has a maximum of $55,000 to invest, BBR's investment advisor decides to recommend a portfolio consisting of two investment funds: an Internet fund and a Blue Chip Fund The Internet fund has a projected annual return of %, whereas the Blue Chip fund has a projected annual return of 7%. The investment advisor requires that at most $40,000 of the client's funds should be invested in the Internet fund, BBR services include a risk rating for each Investment alternative. The Internet fund, which is the more risky of the two investment alternatives, has a risk rating of 6 per thousand dollars invested. The Blue Chip fund has a risk rating of 4 per thousand dollars invested. For example, if $10,000 is invested in each of the two investment funds, B&R's risk rating for the portfolio would be 6(10) + 4(10) = 100. Finally, B&R developed a questionnaire to measure each client's risk tolerance Based on the responses, each dient is classified as a conservative, moderate, or aggressive investor. Suppose that the questionnaire results classified the current dient as a moderate inwestor BBR recommends that a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 260. (a) Formulate a linear programming model to find the best investment strategy for this client (Assume is the amount invested in the internet fund project and Bis the amount invested in the Blue Chip fund. Express the amounts invested in thousands of dollars.) Max 0.081 +0.06B X st Available investment funds N+B<75 x N<50 X Maximum investment in the internet fund 6N + 4B 360 x Maximum risk for a moderate investor N, B20 in dollars for this client?

(b) Build a spreadsheet model and solve the problems using Excel Solver. What is the recommended investment portfolio (in dollars) for this client? Internet und $ 30000 blue chip fund $ 45000 X What is the annual return (in dollars) for the portfolio? #5100 х (b) Suppose that a second client with $55,000 to invest has been classified as an aggressive investor, B&R recommends that the maximum portfolio risk rating for an aggressive investor is 300. What is the recommended investment portfolio (in dollars) for this aggressive investor? internet fund X $ 50000 $ 25000 blue chip fund X (d) Suppose that a third client with $55,000 to invest has been classified as a conservative Investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 180. Develop the recommended investment portfolio (in dollars) for the conservative Investor, internet fund blue chip fund $70000 X $0